The gold market (XAU/USD) seems to continue to face a sad episode on Wednesday. The US Dollar's action that soared due to speculation of an interest rate hike by The Fed has put the price of this precious metal in a very dangerous phase.
Investors are now anxiously awaiting the announcement of the US PCE inflation data and the US GDP data that will be released tomorrow. If the inflation reading comes out stronger than expected, be prepared to see the price of gold pressed even closer to the bottom.
Despite the 'tug of war' drama in the US-Iran peace talks, where Trump claimed that Iran agreed to nuclear inspections but Tehran vehemently denied it, the market seems to be more focused on the strength of the US Dollar and bond yields (Treasury yields).
As a result, demand for safe haven assets such as gold is still not strong enough to fight the current downward trend.
Gold Technical Analysis: Support Level $3,853 Becomes the Final Lifeline!
For those of you who have a position in the gold market, let's analyze the Daily XAU/USD chart to see the critical price levels to watch out for:
On the daily chart, bearish pressure (decline) appears to be very dominant. Gold prices are currently trading within the Market Shift Level price zone.
For your information, this price zone area is often traded by large institutional investors as a hedging strategy, where it will be the trigger for the next price direction, either for a reversal (turn around) or continuation (continue to plunge).
Market Shift Level Zone: If the daily candle price closes below the $3,853 level, the selling momentum is expected to become more aggressive and potentially drag gold down further to find the $3,571 area.
Safe Zone (Fixed Cost Level): On the other hand, gold needs a solid surge to surpass the $4,387 level first to extinguish this bearish sentiment, paving the way for a re-emerge to the $4,891 level.
Conclusion for Traders: The current gold market sentiment can be categorized as Pure Bearish due to the strong US Dollar and high bond yields. Gold's main task now is only one: Defend the $3,853.00 price zone! If this lifeline zone collapses, the Sell party may last for the rest of the week.
